Silver is a precious metal, so it falls into the same category as gold, except that it is widely used in industrial applications while its bright yellow counterpart is not. In fact, the annual supply of silver is replenished by electronics, alloys, dealers and other manufacturers.
The price of an ounce of silver rose 144% in 2025, partly because China announced new export restrictions that raised fears of supply disruptions. The metal gained more ground in the early stages of 2026, but that is actually 28% lower than last year’s high of $121 an ounce.
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of the iShares Silver Trust (NYSEMKT:SLV) An exchange traded fund (ETF) that directly tracks the price of silver. It can be bought through any major stock trading platform, so it is a popular alternative to buying physical silver, which has storage and insurance costs.
Should Investors Buy ETFs After Silver’s Recent Correction? Here’s what history says it can do next.
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Investors typically buy precious metals during times of heightened political and economic uncertainty, as they are proven stores of value dating back thousands of years. Gold is the first choice because of its scarcity, only 219,890 tons of the yellow metal have been mined from the earth throughout human history. Gold is abundant with around 1.7 million tonnes mined so far.
Precious metals do not generate any revenue or income, so they do not grow in value organically. Instead, their perceived value rises as fiat currencies depreciate. The U.S. dollar, for example, has lost about 90% of its purchasing power since 1971, the year the country left the gold standard—a mechanism that prevented the government from printing more money without an equivalent amount of physical gold.
Ironically, over the past five decades, the government has been able to print more dollars at its discretion, expanding the money supply. The chart below shows the relationship between an increasing money supply, the declining purchasing power of the US dollar, and rising gold in dollar terms:
Gold price in US dollar data by YCharts
Political unrest and economic uncertainty are currently rife, with the Trump administration imposing tariffs on many of America’s trading partners, as well as running a significant fiscal deficit that pushed the national debt to $38.5 trillion last year. Investors fear that the only way the government can continue this fiscal policy is to devalue the US dollar by further increasing the money supply.
As precious metals, it will benefit from silver and gold, but the value of silver is heavily influenced by supply demand dynamics. In 2024, about 58% of this annual supply will be absorbed by industrial manufacturers, and another 18% will be used by the jewelry industry. Investors, on the other hand, represent only 16% of the market for physical silver.
That’s why China’s restrictions sparked such a sharp rally last year. The country is the world’s second largest exporter of silver after Hong Kong, but it is also one of the world’s top electronics producers. As a result, it is trying to protect its domestic supply chains by limiting at least how much silver can be exported during 2026 and 2027.
Although conditions seem favorable for more bullishness in silver, it is important to note that gains of 144% in one year are not normal. Over the past 50 years, metals have generated a compound annual return of just 6.2%, which is a very realistic goal going forward.
Volatility is another important consideration. Before 2025, silver had not set a new record high in 14 years, and its two strongest rallies since 1980 were followed by sharp corrections of more than 70%. Since silver prices are 28% lower than last year, we cannot rule out further declines.
With all that said, it’s understandable if investors want to park some money in silver given the trade-offs we’ve explored above. But before rushing out to buy the physical metal, it’s worth considering the benefits of an ETF like the iShares Silver Trust. It can be bought and sold with a few clicks through any major investment platform, while disposing of physical silver is a much slower process, and risky because it has to be shipped to a dealer.
The iShares Silver Trust is not free to own, as it has an expense ratio of 0.5% which is the proportion of the fund reduced each year to cover management costs. This means that a $50,000 investment will cost about $250 in annual fees, but that’s probably still less than the cost of storing and insuring an equivalent amount of physical silver.
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Anthony DiPizio has no position in any of the listed stocks. The Motley Fool has no position in the stocks mentioned. Motley Fool has a disclosure policy.
Should you buy the iShares Silver ETF after the 28% correction? History says that this may happen next. Originally published by Motley Fool
